India Inc stares at higher debt cost with lower tax rate for FPIs set to go

Industry to make representations to Finmin seeking grandfathering on existing investment

Raising capital via debt could become expensive for India Inc once the concessional tax of 5 per cent enjoyed by foreign portfolio investors (FPIs) on their debt investments is raised to 20 per cent. Experts said that since the central government has not provided any extension on the concessional tax, FPIs may look to pass on the additional burden to portfolio companies.

Stakeholders plan to approach the government on the issue. Among other things, they are seeking grandfathering on their existing investment.

“As most of the portfolio companies have tax-bearing contracts with FPIs, the tax burden can eventually fall on